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Repossessions set to increase next year

Repossessions set to increase next year

Category: Mortgages

Updated: 02/06/2011
First Published: 02/06/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The number of house repossessions is set to rise next year, the Council of Mortgage Lenders (CML) has warned.

In its monthly briefing, the body said that the total number of repossessions will increase from 40,000 this year to 45,000 in 2012.

The CML has also predicted that the number of households with arrears of more than 2.5% will remain at around the 180,000 mark this year and next year.

Low interest rates have helped many families keep up with their mortgage repayments, meaning the number of repossessions during this downturn has never come close to matching the more than 75,000 in 1991 during the last recession.

Many homeowners on variable and tracker mortgages, as well as those who reverted to low standard variable rates at the end of their fixed period, have seen their payments fall substantially.

The CML has predicted that interest rates will remain at their record low of 0.5% for most of the remainder of 2011 before rising modestly in 2012.

"Despite the pressure on household finances, we expect the vast majority of households to keep up their mortgage payments, helped by a relatively gentle trajectory for interest rates," said the CML.

If you are experiencing troubles covering your mortgage, the best course of action is to speak directly with your bank and explain your situation, rather than struggling on alone.

Repossession is the last course of action, so your bank will try to aide you in finding a way to make your repayments.

In its forecast, the CML also predicted that the value of mortgage lending will increase slightly this year but that the number of loans approved for house purchase will actually fall.

It has predicted that the number of sales will be less than first thought this year, at around 840,000, before climbing slightly to 900,000 next year.

By contrast, the value of lending this year will total £140 billion, said the CML, up on the £135 billion that was originally predicted.

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